US STOCKS-Wall St up as tech rally offsets Fannie, Freddie

* HP's strong results trigger tech rally

* Fannie, Freddie shares at lowest levels in over 17 years

* Oil prices fall, but energy stocks up (Updates to early afternoon)

By Walter Brandimarte

NEW YORK, Aug 20 (Reuters) - U.S. stocks were slightly higher in choppy trade on Wednesday as strong results from Hewlett-Packard (HPQ.N: Quote, Profile, Research, Stock Buzz) triggered a rally in the technology sector that offset a slump in shares of Fannie Mae and Freddie Mac to more than 17-year lows.

HP's quarterly profit rose a forecast-beating 14 percent, raising hopes that demand from abroad will support technology spending, despite weakness in the United States. Shares of the world's largest computer maker jumped 5.8 percent to $46.23 and were the main boost for both the Dow and the S&P 500.

Financials also rebounded from Tuesday's sell-off as U.S. crude oil prices fell about 50 cents per barrel, supporting hopes inflation will ease and interest rates will remain low, helping the bank sector.

But shares of housing finance giants Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) plunged on growing concerns that a possible government bailout might dilute shareholder value.

"Until that issue gets resolved you'll continue to have that uncertainty, and it will be hard for the market to make any progress in that atmosphere," said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm in Toledo, Ohio.

The Dow Jones industrial average .DJI rose 32.73 points, or 0.29 percent, at 11,381.28, while the Standard & Poor's 500 Index .SPX gained 2.70 points, or 0.21 percent, at 1,269.39. The Nasdaq Composite Index .IXIC edged up 3.69 points, or 0.15 percent, at 2,388.05.

Shares of Fannie Mae, the biggest U.S. provider of housing finance, fell 19.1 percent to $4.86 after falling as low as $4.74. Shares of Freddie Mac fell 23.5 percent to $3.19, after trading as low as $3.15.

The rise in shares of HP, a Dow component, lent support to other big-cap technology stocks, including Apple (AAPL.O: Quote, Profile, Research, Stock Buzz), which was a top boost to the Nasdaq, rising 0.9 percent to $175.20.

Research In Motion Ltd (RIM.TO: Quote, Profile, Research, Stock Buzz) (RIMM.O: Quote, Profile, Research, Stock Buzz) shares gained 3.5 percent to $130.44 after Citigroup reiterated its "buy" rating on stock of the BlackBerry maker, and said it thought the company's new Bold smartphone was a strong product.

Despite the fall in oil prices, energy shares posted strong gains, supporting the S&P 500. Shares of oil producer and refiner Hess Corp (HES.N: Quote, Profile, Research, Stock Buzz) climbed 2.7 percent to $101.14, while ConocoPhillips (COP.N: Quote, Profile, Research, Stock Buzz) rose 0.98 percent to $80.03.

"To me, the market has now recognized that oil services stocks and equipment stocks sold off more than they should have." said Michael Koskuba, portfolio manager and analyst with Victory Capital Management. "Now they are finally recognizing the strong fundamentals that those stocks have despite what the price of oil is on a weekly basis."

On the downside, concerns about consumer weakness sent shares of big manufacturers down. General Electric (GE.N: Quote, Profile, Research, Stock Buzz) fell 1 percent to $28.42 while Textron Inc (TXT.N: Quote, Profile, Research, Stock Buzz) lost 3.1 percent at $38.79. (Additional reporting by Steven C. Johnson; Editing by Leslie Adler)